Columbia University professor awarded economics Nobel Prize

NEW YORK -- Columbia University professor of political economy Edmund Phelps was awarded the 2006 Nobel Prize in Economics, the Royal Swedish Academy of Sciences announced Monday.\nPhelps will receive the honor and a $1.37 million prize for his work in understanding the trade-off between inflation and unemployment. According to the Nobel Foundation's Web site, Phelps is the first solo economics award winner since 1999, when it went to Robert Mundell, also a Columbia professor, for his analysis of monetary and fiscal policy in relation to exchange rates.\n"When someone in your community wins a Nobel prize, everyone feels a lot better," Columbia President Lee Bollinger said at a press conference in Low Memorial Library. "The truth is we all feel a little bit smarter. It gives us enormous satisfaction and pride."\nBollinger was joined by Phelps, who is also director of the Center for Capitalism and Society; Jeffrey Sachs, director of the Earth Institute; and Janet Currie, chair of the economics department.\n"This is a fantastic day for economics at Columbia," Currie said. \nShe praised Phelps for "putting the worker back in the macroeconomy" and for the broad range of subjects his work has benefited.\n"Ned is really the economist's economist," Sachs said. "Everybody loves him."\nThe guest of honor spoke about growing up in Evanston, Ill., thanked the many colleagues he's worked with during his career and went on to describe how he became interested in his current field.\n"My father asked me to take one economics class," he said. "I had been intending to major in philosophy, which I continued to work on surreptitiously."\nFrom that first class to his post-graduate research, Phelps was troubled by what he saw as a large gap in his mastery of the subject.\n"Here I am ... and I still don't know how to reconcile macroeconomics and microeconomics," he said. "I have to do it myself, then, if it's going to be done."\nIn the 1960s, Phelps conceptualized the natural rate of unemployment, which followed from the Phillips model of inflation-unemployment trade-offs. The theory led to the rethinking of monetary policy within central banks. More recently, he has worked to push for a federal system to subsidize low-wage workers but said such work has "struck out" in the United States.\nDespite his newfound fame and wealth, Phelps will continue with his teaching. \n"I'm a workaholic," he said.